Programme Objective

Measuring fair value poses significant challenges to entities due to the inherent risk in having to apply judgement which can be construed as subjective rather than objective. Fair value cannot be measured with absolute precision and management is expected to provide a faithful representation of fair value at the measurement date based on all information available.

This course is intended to provide a practical approach to various fair value measurement methodologies. It also provides an analysis of the various accounting models to account for the effect of changes in fair value.

Programme Outline

Topic 1

An introduction to the development of fair value accounting models

• Fair value measurement Versus other measurements (historical cost; current cost; realizable (settlement) value; present value)
• Double entry system for fair value accounting
• Handling gains and losses arising from fair value changes
• Circumstances where fair value accounting may not be appropriate in reporting transactions and events in practice
• Impact on financial results and financial positions – Interpreting financial statements based on fair value accounting system

 
Topic 2
Key features of Fair Value Measurement Standard

• Definition of fair value
• Fair value hierarchy (Level 1, 2 and 3)
•  ‘Highest and best use’ fair value measurement concept for non-financial assets
• Valuation techniques
• Fair value and unit of measurement
• Disclosures – methods used, assumptions made and hierarchy of fair value, etc

 
Topic 3 Accounting issues
Dealing with fair value accounting for non-financial items – general rules and practical examples

• The use of fair value as a measurement of value in various accounting Standards
• The difference between ‘fair value model’ and ‘revaluation model’
• Reporting changes of fair value in ‘profit or loss’; or ‘other comprehensive income’

 
Topic 4
Dealing with fair value accounting for financial Instruments – general rules and practical examples

• Fair value and amortised cost using effective interest method
• Present value techniques: Contractual cash flows and discount rate
• The initial accounting for fair value of intercompany borrowing and lending at below market interest rates
• Accounting for fair value of financial guarantee contracts
• Determining and accounting for fair value of derivatives

 
Training Methodology
Lecture style, with practical illustrations, technical flow-charts, conceptual “mind maps” and interactive discussions.

Closing Date for Registration
1 week before programme or until full enrolment

Intended For

This programme is suitable for all Finance Professionals and Audit Professionals.

Programme Facilitator(s)